Consumers’ Inflation Expectations Rebound
March 14, 2016

NEW YORK—Results from the February 2016 Survey of Consumer Expectations (SCE) suggest a rebound in expectations about inflation, and growth in home prices, earnings, income and spending. Additional labor expectations are mixed as the mean perceived probability of finding a job and the mean perceived probability of losing a job both declined.

The main findings from the February 2016 Survey are:


  • Median inflation expectations increased at the one-year horizon (from 2.4 percent in January to 2.7 percent in February) and at the three-year ahead horizon (from 2.5 percent in January to 2.6 percent in February). The increase was most pronounced among respondents with lower income, lower education and lower numeracy. Median inflation expectations at both horizons, however, remain at the low end of the range observed over the past two and a half years.
  • Median home price expectations increased by 0.1 percentage point in February to 3.1 percent, but remain below the series’ average.  The increase was broad-based, but especially large in the West and Northeast.
  • The median one-year ahead gasoline price change expectations rebounded sharply, from 2.8 percent in January to 4.9 percent in February. This increase marks a return to levels not seen since the summer of 2015.
  • Expectations for changes in the prices of medical care, college education, and rent also rose slightly, while food price expectations remained stable.

Labor Market

  • After declining the past two months, the median one-year ahead expected earnings growth rebounded to 2.5 percent in February, back to levels recorded for most of 2015. The increase was broad-based across demographic groups, but was most pronounced among respondents with a high school degree or less.
  • Mean national unemployment expectations (that is, the mean probability that the U.S. unemployment rate will be higher one year from now), fell slightly from 38.1 percent in January to 37.9 percent in February.
  • The mean perceived probability of losing one’s job in the next 12 months decreased slightly from 13.9 percent  in January to 13.8 percent in February, remaining within the tight range of 12.7 to 15.0 percent seen over the past twelve months. The mean probability of leaving one’s job voluntarily in the next 12 months remained stable at 21.3 percent.
  • The mean perceived probability of finding a job (if one’s current job were lost) decreased from 56.0 percent in January to 53.9 percent in February, slightly lower than 12 months ago. This decrease was consistent across all age, education and income groups.

Household Finance

  • Median expected household income growth increased from 2.2 percent in January to 2.5 percent in February, but remains lower than levels seen through most of 2015. The increase was driven by older, less educated and lower income respondents.
  • Median household spending growth expectations rebounded to 4.0 percent in February. This brings the series closer to its historic average of 4.3 percent and away from the December 2015 low of 2.9 percent.
  • The median change in the amount of taxes respondents expect to pay a year from now reached a new series low in February at 2.6 percent.
  • Respondents were slightly more optimistic about perceived (over the past 12 months) and expected (over the coming 12 months) credit availability.
  • The average perceived probability of missing a minimum debt payment over the next three months remained stable at 11.8 percent, close to its 2015 average of 12.0 percent.
  • The mean perceived probability of a higher average year-ahead interest rate on savings accounts decreased from 32.1 percent in January to 29.9 percent in February, slightly higher than 12 months ago.

About the Survey of Consumer Expectations
The SCE contains information about how consumers expect overall inflation and prices for food, gas, housing and education to behave. It also provides insight into Americans’ views about job prospects and earnings growth and their expectations about future spending and access to credit. The SCE also provides measures of uncertainty in expectations for the main outcomes of interest. Expectations are also available by age, geography, income, education and numeracy. 

The SCE is a nationally representative, internet-based survey of a rotating panel of approximately 1,200 household heads. Respondents participate in the panel for up to twelve months, with a roughly equal number rotating in and out of the panel each month. Unlike comparable surveys based on repeated cross-sections with a different set of respondents in each wave, our panel allows us to observe the changes in expectations and behavior of the same individuals over time.

The survey is conducted on our behalf by The Demand Institute, a non-profit organization jointly operated by The Conference Board and Nielsen. The sampling frame for the SCE is based on that used for The Conference Board’s Consumer Confidence Survey (CCS). Respondents to the CCS, itself based on a representative national sample drawn from mailing addresses, are invited to join the SCE internet panel.

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